Co-op crisis boils over: depositors gherao officials

It was an incident waiting to happen. Shaken by the sudden demise of their trust and the possibility losing their hard earned money, depositors of the Royale Co-operative Bank gheraoed the bank top officials.

Depositors and agents encircled the bank chairman, Jitu Modi, and managing director, Parul Shah, demanding their deposits back immediately. The duo expressed their helplessness, not even the Rs 500 stipulated by RBI. That led to abuses and threats by the depositors. Even the female depositors joined the chorus and hurled abuses on the chairman and MD.

"We are trying to recover money. Meanwhile, some of our debtors have agreed to repay their loan soon. Until then, we are not in a position to pay any money to the depositors," the officials told Business Standard.

But there were weak links in the defence too. When Shah started giving the details of the defaulters, Modi opposed. This was followed with allegations and counter allegations and the washing of dirty linen out in the public.

When the matter cooled down, Modi said, "Many depositors have approached us to settle their loan account against FDRs (fixed deposit receipts) of the bank. We cannot take a decision in this regard. We have sought RBI's permission. If RBI permits us to settle the accounts, it will help a great deal in improving the bank's liquidity."

"In the meantime, we want to assure the depositors that their deposits are insured by Deposit Insurance Credit Guarantee Corporation, and hence they need not worry about the security of their moneys," Modi added.

Modi's statement, far from convincing, clearly shows that the management has lost all hopes of restarting the bank, and has almost given up.

On the other hand, the atmosphere at the other troubled bank, Metro Co-operative Bank Ltd, was not at all hostile. Though there was a of rush of depositors, the bank functioned normally and repaid the money as per the limit set by RBI.

"We are strictly adhering to the RBI norms, and have repaid close to Rs 4 lakh to depositors since Monday. We have also made recovery of over Rs 12 lakh in last three days. We have got commitments from the customers, who have assured us to repay their loan amounts to the bank in the near future. We are aiming to recover Rs 1 crore before Diwali," Kamalkishore Kapuria, chairman, Metro Bank told Business Standard.

"We are making all efforts to ensure that the RBI lifts the restrictions under section 35 (A) of Banking Regulations Act, which it has imposed on Metro Bank.

"We need approximately Rs 4 crore for this. We are concentrating on recovery. We are also talking to our share holders, who have agreed to pump in more money," Kapuria said.